Grid Fill Loops are not connected by wire/boundary edges
If it was possible to Grid Fill the selected edges, you would get edges that are shared by 3 faces.



It is technically allowed topology, but is not considered correct topology. Most tools don't produce this awkward topology because it is rarely desirable due to how normals and subsurf are calculated.



In the image above I duplicated the edge ring so it isn't joined to the original edge ring, then did a Grid Fill. If you really wanted to make a problem mesh you could remove doubles and it would merge the edges. But you will not be able to force the Grid Fill to produce mesh results that are considered bad.